RNS Number : 3744Q
Petrol AD
29 August 2014
Consolidated Financial Statements
as of June 30, 2014
andNotes to the Consolidated Financial Statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the period ended June 30, 2014
Note
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Revenue
6
470,641
600,821
245,877
317,544
Other income
7
812
997
265
303
Cost of goods sold
(433,960)
(568,261)
(224,379)
(296,746)
Materials and consumables
8
(3,898)
(4,241)
(1,749)
(1,998)
Hired services
9
(9,138)
(9,500)
(5,020)
(5,014)
Employee benefits expenses
10
(19,092)
(14,099)
(10,854)
(7,492)
Depreciation and amortization expenses
14, 15
(5,894)
(6,257)
(2,939)
(3,099)
Other expenses
11
(2,941)
(2,739)
(2,158)
(1,642)
Finance income
12
2,569
4,456
1,346
10,948
Finance costs
12
(21,670)
(24,421)
(12,640)
(10,301)
Loss before tax
(22,571)
(23,244)
(12,251)
2,503
Income tax expense
13
(437)
(540)
(77)
(251)
Net loss for the period
(23,008)
(23,784)
(12,328)
2,252
Total comprehensive income for the period
(23,008)
(23,784)
(12,328)
2,252
Loss attributable to:
Owners of the Parent company
(23,020)
(23,786)
(12,338)
2,251
Non-controlling interest
12
2
10
1
Loss for the period
(23,008)
(23,784)
(12,328)
2,252
Total comprehensive income attributable to:
Owners of the Parent company
(23,020)
(23,786)
(12,338)
2,251
Non-controlling interest
12
2
10
1
Total comprehensive income for the period
(23,008)
(23,784)
(12,328)
2,252
These consolidated financial statements were approved on behalf of Petrol AD by:
GeorgiTatarski
MilkoDimitrov
Daniela Taskova-Stoykova
ExecutiveDirector
ExecutiveDirector
Chief Accountant
August 28, 2014
The notes on pages 9 to 44 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Non-current assets
Property, plant and equipment and intangible assets
14
165,468
165,382
164,047
Investment property
15
20,578
20,605
20,618
Investments in subsidiaries in process of establishment and other investments
16, 27
1
1
249
Goodwill
17
18,332
18,332
18,332
Deferred tax assets
13
226
181
198
Loans granted
18
21,709
21,509
21,034
Compulsory inventory
19
70,915
71,865
73,493
Total non-current assets
297,229
297,875
297,971
Current assets
Inventory
19
45,214
36,777
78,099
Loans granted
18
52,580
51,261
58,475
Trade and other receivables
20
137,858
95,334
87,500
Current income tax receivable
21
546
188
353
Cash and cash equivalents
22
16,868
37,907
11,507
Total current assets
253,066
221,467
235,934
Total assets
550,295
519,342
533,905
Shareholder's equity
Registered capital
23
108,835
108,835
63,486
General reserves
18,864
18,864
18,864
Accumulated loss
(104,487)
(92,149)
(167,651)
Total equity, attributable to the owners of the Parent company
23,212
35,550
(85,301)
Non-controlling interest
29
71
61
57
Total shareholder's equity
23,283
35,611
(85,244)
Non-current liabilities
Loans and borrowings
24
201,883
207,806
208,250
Obligation for defined benefit retirement compensations
25
849
849
849
Total non-current liabilities
202,732
208,655
209,099
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
Note
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Current liabilities
Trade and other payables
26
125,807
102,983
225,459
Loans and borrowings
24
198,473
172,093
184,591
Total current liabilities
324,280
275,076
410,050
Total liabilities
527,012
483,731
619,149
Total equity and liabilities
550,295
519,342
533,905
These consolidated financial statements were approved on behalf of Petrol AD by:
GeorgiTatarski
Milko Dimitrov
Daniela Taskova-Stoykova
ExecutiveDirector
ExecutiveDirector
Chief Accountant
August 28, 2014
The notes on pages 9 to 44 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to the owners of the Parent Company
Non-controlling interest
Total equity
Share capital
General reserve
Accumu-lated loss
Total
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Balance at January 01, 2013
76,273
18,864
(160,734)
(65,597)
54
(65,543)
Comprehensive income for the period
Loss for the period
-
-
(23,786)
(23,786)
2
(23,784)
Total comprehensive income
-
-
(23,786)
(23,786)
2
(23,784)
Transactions with shareholders, recognized directly in equity
Disposal of own shares
(45)
-
(232)
(277)
-
(277)
Total transactions with shareholders in equity
(45)
-
(232)
(277)
-
(277)
Balance at June 30, 2013
76,228
18,864
(184,752)
(89,660)
56
(89,604)
Comprehensive income for the period
Loss for the period
-
-
(4,332)
(4,332)
1
(4,331)
Other comprehensive income
-
-
(16)
(16)
-
(16)
Total comprehensive income
-
-
(4,348)
(4,348)
1
(4,347)
Transactions with shareholders, recognized directly in equity
Disposal of own shares
93
-
17,322
17,415
-
17,415
Loss of control on special purpose entities
(12,835)
-
4,127
(8,708)
-
(8,708)
Total transactions with shareholders in equity
(12,742)
-
21,449
8,707
-
8,707
Balance at December 31, 2013
63,486
18,864
(167,651)
(85,301)
57
(85,244)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(continued)
Equity attributable to the owners of the Parent Company
Non-controlling interest
Total equity
Share capital
General reserve
Accumu-lated loss
Total
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Balance at December 31, 2013
63,486
18,864
(167,651)
(85,301)
57
(85,244)
Comprehensive income for the period
Loss for the period
-
-
(23,020)
(23,020)
12
(23,008)
Total comprehensive income
-
-
(23,020)
(23,020)
12
(23,008)
Transactions with shareholders, recognized directly in equity
Establishment of subsidiary with non-controlling interest
-
-
-
-
2
2
Disposal of own shares
45,349
-
86,184
131,533
-
131,533
Total transactions with shareholders in equity
45,349
-
86,184
131,533
2
131,535
Balance at June 30, 2014
108,835
18,864
(104,487)
23,212
71
23,283
These consolidated financial statements were approved on behalf of Petrol AD by:
GeorgiTatarski
MilkoDimitrov
Daniela Taskova-Stoykova
ExecutiveDirector
ExecutiveDirector
Chief Accountant
August 28, 2014
The notes on pages 9 to 44 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended June 30
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Cash flows from operating activities
Net loss before tax
(22,571)
(23,244)
(12,230)
2,503
Adjustments for:
Depreciation/amortization of property, plant and equipment and intangible assets
5,894
6,257
2,939
3,099
Interest expense, bank fees and commissions, net
15,392
15,514
7,897
8,008
Shortages and normal loss, net of excess assets
451
882
434
577
Provisions for unused paid leave and retirement benefits
665
200
424
11
Assets with low value written-off
-
47
-
47
Loss (gain) on liquidation of assets
47
(106)
46
24
Impairment of assets
-
(137)
-
(137)
Gain on sale of property, plant and equipment
(46)
(50)
(11)
(35)
Payables written-off
(36)
(24)
(17)
(2)
Receivables written-off
2
2
2
2
(202)
(659)
(516)
14,097
Change in trade payables
(95,658)
(16,567)
49,486
4,459
Change in inventories
34,993
7,458
(7,940)
22,102
Change in trade receivables
(50,053)
3,224
(42,455)
5,696
Cash flows from operating activities
(110,920)
(6,544)
(1,425)
46,354
Interest and bank fees and commissions paid
(19,028)
(17,819)
(8,472)
(6,180)
Income tax paid
(658)
(514)
(480)
(503)
Net cash used in operating activities
(130,606)
(24,877)
(10,377)
39,671
Cash flows from investing activities
Payments for acquisition of property, plant and equipment, intangible assets and investment properties
(3,525)
(1,683)
(748)
(952)
Proceeds from sale of property, plant and equipment
31
782
10
515
Interest received on loans and deposits granted
6,104
1,870
55
757
Payments for acquision of NCI
2
-
2
-
Payments for loans and deposits granted, net
(5,928)
(5,262)
(301)
(4,557)
Net cash flows used in investing activities
(3,316)
(4,293)
(982)
(4,237)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended June 30 (continued)
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Cash flows from financing activities
Proceeds from loans and borrowings
66,398
120,118
25,734
31,527
Repayment of loans and borrowings
(59,864)
(71,328)
(6,710)
(44,929)
Payments under leaseback agreements
(1,138)
(841)
(959)
(455)
Interest paid under leaseback agreements
(990)
(1,169)
(566)
(480)
Payments under finance lease agreements
(347)
(449)
(174)
(270)
Interest paid under finance lease agreements
(18)
(29)
(8)
(14)
Payments for redemption of own shares
-
(277)
-
-
Proceeds from sale of own shares
131,533
-
-
-
Dividends paid
-
(1,463)
-
(1,463)
Net cash flows from financing activities
135,574
44,562
17,317
(16,084)
Net decrease in cash and cash equivalents for the period
1,652
15,392
5,958
19,350
Cash and cash equivalents at the beginning of the period
11,507
10,764
7,513
6,469
Effect of movement in exchange rates
3,709
(4,451)
3,397
(4,114)
Cash and cash equivalents at the end of the period (see also note 22)
16,868
21,705
16,868
21,705
These consolidated financial statements were approved on behalf of Petrol AD by:
GeorgiTatarski
MilkoDimitrov
Daniela Taskova-Stoykova
ExecutiveDirector
ExecutiveDirector
Chief Accountant
August 28, 2014
The notes on pages 9 to 44 are an integral part of these consolidated financial statements.
Notes
to the Consolidated Financial Statements
as of June 30, 2014
1. Legal status
Petrol AD (the Parent company) was registered in Sofia. The address of the Parent company's registered office is 43 Cherni Vrah Blvd., Sofia. As at the end of the reporting period the shareholders of the Company are legal entities, the State - through the Ministry of Economics and Energy, and individual shareholders (see also note 23).
The main activity of Petrol AD and its subsidiaries (the Group) is wholesale and retail trade with petroleum products and non-petroleum goods, transport and service activity. The Parent company is one of the oldest trade companies in the Republic of Bulgaria and owns the largest network of fuel stations in the country.
These consolidated financial statements were approved for issue by the Managing Board of the Company on August 28, 2014.
2. Basis of preparation of these consolidated financial statements and accounting principles
2.1. General
These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union.
These consolidated financial statements have been prepared on a historical cost basis, except for the provisions and the defined benefit liability, recognized at the present value of the expected future payments.
2.2. Application of new and revised IFRS
2.2.1. Standards and interpretations effective and applied during the current reporting period
The Group has applied the following new standards and amendments to standards, including any resulting changes in other standards effective for reporting periods beginning on or after January 1, 2014:
IFRS 10 Consolidated Financial Statementseffective for annual periods beginning on or after, January 1, 2014. IFRS 10 introduces a single control model to determine whether an investee should be consolidated. The amendment has no impact on the consolidated financial statements, since according to the new standard the assessment of the control over the current investees would not change the initial conclusions about the exercised control over these entities.
IFRS 11 Joint Agreements, effective for annual periods beginning on or after, January 1, 2014. IFRS 11 has no material impact on the consolidated financial statements, since it is not a party to any joint arrangements.
IFRS 12 Disclosure of Interest in Other Enterprises,effective for annual periods beginning on or after, January 1, 2014. The new Standard, when initially applied, will have a significant impact on the level of disclosure in the financial statements. The Group is required to expand disclosures about its interests in subsidiaries.
IAS 27 Separate Financial Statements (2011) amending IAS 27 (2008), effective for annual periods beginning on or after January 1, 2014. The amendment to the new Standard has no material impact on the consolidated financial statements.
2.2.1. Standards and interpretations effective and applied during the current reporting period (continued)
IAS 28 Investments in associates and joint ventures (2011) amending IAS 28 (2008), effective for annual periods beginning on or after January 1, 2014. The amendments to Standard has no material impact on the consolidated financial statements, since it does not have any investments in associates or joint ventures that will be impacted by these amendments.
Amendments to IAS 32: Offsetting of financial assets and liabilities, effective for annual periods beginning on or after, January 1, 2014. The amendments has no impact on the consolidated financial statements, since the Group does not apply offsetting to any of its financial assets and financial liabilities and it has not entered into master netting arrangements.
Amendments to IFRS 10, IFRS 12 and IFRS 27 - Investment Entities, effective for annual periods beginning on or after January 1, 2014. The amendments has no impact on the consolidated financial statements, since any Group's subsidiary does not meet the definition of an investment company.
Amendments to IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets, effective for annual periods beginning on or after January 1, 2014. The the Amendment, when initially applied, will have certain impact on the level of disclosure in the financial statements. The Group is required to expand disclosures about recoverable amounts when they are based on fair value less costs of disposals and impairment is recognised.
Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting, effective for annual periods beginning on or after January 1, 2014. The amendment has no impact on the consolidated financial statements, since the Group does not apply hedge accounting.
IFRIC 21 - Levies(Effective for annual periods beginning on or after January 1, 2014; to be applied retrospectively. Earlier application is permitted)
2.2.2. New standards and interpretations, not yet applied
IFRSs, interpretations and amendments to IFRSs issued by IASB, not yet endorsed by the European Commission (EC):
Management believes that it is appropriate to disclose that the following new or revised standards, new interpretations and amendments to existing standards, which are already issued by IASB, are not yet endorsed for adoption by the European Commission, and therefore are not taken into account in preparing these consolidated financial statements. The actual effective dates for them will depend on the endorsement decision of the EC.
IFRS 9 Financial Instruments (2009), additions to IFRS 9 (2010 and 2013) and Amendment to IFRS 9 and IFRS 7Mandatory effective date and transitional disclosures (Effective date not yet determined; to be applied retrospectively. Earlier application is permitted.)
Amendments to IAS 19 - Defined Benefit Plans: Employee Contributions(Effective for annual periods beginning on or after July 1, 2014. Earlier application is permitted. The amendments apply retrospectively).
IFRS 14 -Regulatory Deferral Accounts(Effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted)
IFRS 15 - Revenue from Contracts with Customers(Effective for annual periods beginning on or after January 1, 2017; to be applied retrospectively.Earlier application is permitted)
2.3. Functional and presentation currency of the consolidated financial statements
Functional currency is the currency of the primary economic environment, in which a company operates and primarily generates and disburses cash. It reflects the main transactions, events and conditions considered significant for the Group.
These consolidated financial statements are presented in thousands of BGN, which is the functional currency of Petrol AD. All financial information presented in BGN has been rounded to the nearest thousand, except when otherwise indicated.
2.4. Foreign currency
Transactions in foreign currency are initially recorded at amounts denominated in BGN at the official exchange rate of the Bulgarian National Bank as of the date of the transaction. Foreign exchange rate differences arising from settlement of foreign exchange positions or from reporting these positions at rates different from those of the initial recording, are reported in profit and loss for the respective period.
Since January 1, 1999 the Bulgarian Lev has been fixed against the Euro at rate 1.95583 BGN for 1 Euro.
The monetary positions denominated in foreign currency as at June 30, 2014, March 31, 2014 and December 31, 2013 are stated in these consolidated financial statements at the closing exchange rate of the Bulgarian National Bank. The closing exchange rates of the BGN against USD as at the end of current and prior reporting periods are as follows:
June 30, 2014:
1 USD = 1.43200 BGN
March 31, 2014:
1 USD = 1.41850 BGN
December 31, 2013:
1 USD = 1.41902 BGN
2.5. Accounting assumptions and estimates
The application of IFRS requires that the Management makes certain reasonable assumptions and accounting estimates in the preparation of these consolidated financial statements, in order to determine the value of some assets, liabilities, revenue and expenses. These estimates and assumptions are based on the best estimate of the Management, taking into account historical experience and analysis of all factors, which have impact given the circumstances as of the date of preparation of the consolidated financial statements. The actual results could differ from the estimates presented in these consolidated financial statements.
Information about assumptions and estimation uncertainties, that have a significant risk of resulting in material adjustments in the next financial periods, are included in the following notes:
Note 13 - recoverability of deferred tax assets
Note 17 - measuring the recoverable amount of the recognized goodwill acquired in business combinations
2.6. Basis of consolidation
2.6.1. Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group (see also note 2.6.3.). The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment (see also note 3.5.2.). Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities (see also note 3.4).
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.
If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree's employees (acquiree's awards) and relate to past services, then all or a portion of the mount of the acquirer's replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree's awards and the extent to which the replacement awards relate to pre-combination service.
2.6.2. Non-controlling interest
Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly to the Parent company. Non-controlling interest is represented within equity in the consolidated statement of financial position, separately from the equity of the owners of the Parent company.
The non-controlling interest is measured at its proportionate share of the acquiree's identifiable net assets at the acquisition date.
Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
2.6.3. Subsidiaries
Subsidiaries are companies which are controlled by the Group. Control is the power to govern the financial and operating policy of a subsidiary in order to benefit from it. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
In compliance with SIC 12Consolidation - Special Purpose Entities, the financial statements of two entities are consolidated in their capacity of special purpose entities as of January 1, 2009 till November 2013 (see also note 28).
2.6.4. Loss of control
When the Group losses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related non-controlling interest and the other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. Subsequently it is recognized as an equity-accounted investee or an available-for-sale financial asset depending on the level of influence retained.
2.6.5. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
2.6.6. Associates
Associates are those entities in which the Group has significant influence. Significant influence is the right of participation in, but not control over, the financial and operating policy decisions of the investee, but not control over these policies.
Investments in associates are presented in the statement of financial position using the equity method of accounting. They are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence or joint control ceases.
When the Group's share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.
2.6.7. Goodwill
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses (see also note 2.6.1.).
2.7 Going concern basis of accounting
The consolidated financial statements have been prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, the Management has taken into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. This assumes that the Group will be able to repay regularly its bond and trade liabilities, loans and interest due in accordance with the contractual agreements.
3. Definition and valuation of items of the statement of financial position and the statement of comprehensive income
3.1. Property, plant and equipment and intangible assets
Property, plant and equipment, and intangible assets are measured initially at acquisition cost. If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
After initial recognition property, plant and equipment, and intangible assets are measured at cost less accumulated depreciation and any accumulated impairment loss (see also note 3.5.2.).
Subsequent costs, including replacement of a component of an asset, are capitalised in the cost of the asset, only when it is probable that future economic benefits associated with the expenditure will flow to the Group. The carrying amount of the replaced items is derecognized in accordance with the requirements of IAS 16 Property, Plant and Equipment. All other subsequent costs are recognized as incurred.
Gains or losses on disposal of property, plant and equipment (calculated as a difference between the proceeds from disposal and the carrying amount of the asset) are recognised net in the other income/ expenses in profit or loss for the period.
When the use of a property, plant and equipment changes from owner-occupied to investment property, the property is reclassified as investment property.
Depreciation and amortisation are recognised over the estimated useful lives applying the straight-line method. Depreciation and amortisation are recognised in profit or loss of the current period. Land, assets under construction and fully depreciated assets are not depreciated/ amortised.
The estimated useful lives are as follows:
Administrative and commercial buildings
25 years
Machinery, plant and equipment
2 - 25 years
Vehicles
4 - 10 years
Office equipment
7 years
Intangible assets
2 - 7 years
Depreciation/amortisation commences from the beginning of the month following the month when the asset is available for use, and ceases at the earlier of the date when the asset is classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations and the date of its derecognition.
As of the end of the reporting period, the Group's Management reviews the useful lifes and the depreciation method of property, plant and equipment and intangible assets. If any difference between expectations and previous accounting estimates exists, the relevant adjustments are made.
3.2. Investment property
Investment property is property held by the Group to accumulate rent income or to increase the equity value, or both (including property under construction for future use as investment property).
Investment properties are carried at cost less depreciation and any impairment loss (see also note 3.5.2.).
Any gain or loss on disposal of investment property (calculated as a difference between the proceeds from disposal and the carrying amount of the asset) is recognized in profit or loss for the period.
Depreciation of investment properties are recognized in profit or loss, over their estimated useful lives, applying the straight-line method.
The estimated useful lives for the current and comparative periods are as follows:
Administrative and trade buildings
25 years
Machinery, plant and equipment
2, 3 and 25 years
Office equipment
7 years
As at the end of each reporting period, the Management of the Group reviews useful lives and the depreciation/amortization method of investment property. In case the Management identifies differences between expectations and previous accounting estimates, the relevant adjustments are made.
3.3. Inventory
Inventories are stated at the lower of cost and net realizable value. The cost of inventories comprises purchase price, transportation costs, custom duties, excise duties and other similar costs. The net realizable value represents the estimated selling price less estimated selling expenses.
Upon its consumption, the cost of inventories is measured using the following methods:
Retail of fuels
weighted average cost
Wholesale of fuels
first in, first out
Materials and other goods
weighted average cost
3.4. Financial instruments
The Group classifies non-derivative financial assets into the loans granted and receivables category, and non-derivative financial liabilities into the other financial liabilities category.
3.4.1. Non-derivative financial assets and financial liabilities - recognition and derecognition
The Group initially recognises loans and receivables and debt securities issued on the date that they are originated. All other financial assets and financial liabilities are initially recognised on the trade date.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability.
3.4.1. Non-derivative financial assets and financial liabilities - recognition and derecognition (continued)
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
3.4.2. Non-derivative financial assets - measurement
Loans granted and receivables
These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method less any impairment loss. Current receivables are not amortised.
Cash and cash equivalents
In the statement of cash flows, cash comprises cash in hand, cash at banks and cash in transit, except for restricted cash, which the Group temporary has no right to use. Cash in transit comprises cash collected from petrol stations as at the end of the reporting period but actually received in the bank accounts of the Group in the beginning of the next reporting period.
3.4.3. Non-derivative financial liabilities - measurement
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
3.5. Impairment
3.5.1. Non-derivative financial assets
Financial assets, not classified as at fair value through profit or loss, are assessed at each reporting date to determine whether there is an objective evidence of impairment. Objective evidence that financial assets are impaired includes:
default or delinquency by a debtor;
restructuring of an amount due to the Group on terms that the Group would not consider otherwise;
indications that a debtor or issuer will enter bankruptcy;
adverse changes in the payment status of borrowers or issuers;
the disappearance of an active market for a security;
observable data indicating that there is measurable decrease in expected cash flows from a group of financial assets.
3.5.1. Non-derivative financial assets (continued)
Financial assets carried at amortised cost
The Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables) at both a specific asset and collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.
In assessing collective impairment the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted according to the management's judgement as to whether the current economic and credit conditions are such, that it would possible for the actual losses to be greater or less than the suggested by the historical trends.
An impairment loss is calculated as the difference between an asset's carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
3.5.2. Non-financial assets
The carrying amounts of the Group's non-financial assets (other than inventories and deferred tax assets) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Intangible assets that have indefinite useful lives, or that are not yet available for use, are tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.6. Registered capital and redemption of own shares
The registered capital is the capital of the Parent company, presented at historical cost as of the date of its registration. The registered capital also comprises the equity of the special purpose entities presented at historical cost as of the date of its registration.
When at the end of the reporting period the Group - through Parent company or its subsidiaries - has reacquired shares of the Parent company, their par value is presented as a decrease in share capital, and the difference below or above the par value - in retained earnings, according to IAS 32 Financial Instruments: Disclosure and Presentation.
3.7. Deferred income and deferred expenses
Deferred income and deferred expenses in the statement of financial position of the Group comprises revenue and expenses, which are prepaid in the current period, but relate to future periods, such as guarantees, insurance, subscriptions, rent, etc.
3.8. Employment benefits
Defined benefit plans
In accordance with the Labour Code, the Group has an obligation to pay retirement benefits to its employees upon retirement, based on the length of service, age and labour category. Since these benefits qualify for defined benefits plan in accordance with IAS 19 Employee benefits, in accordance with the requirements of this standard the Group recognises the present amount of the benefits as a liability.
The Group's obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods and discounting that amount.
The calculation is performed annually by a qualified actuary using the projected unit credit method. The Group determines the net interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability.
The projected unit credit method presents a liability that may arise in future, based on a number of assumptions. From this point of view, the method is sensitive to assumptions of values of main parameters, on which the obligation and the due amount are dependent. The main assumptions, on which the amount of the obligation is dependent, are based on demographic, financial and other assumptions.
Remeasurements arising from defined benefit plans comprise actuarial gains and losses and are recognised in other comprehensive income. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
Short-term employee benefits
Short-term employee benefit obligations are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
3.9. Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous years.
3.9. Income tax (continued)
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
In accordance with the tax legislation enforceable for the years ended 2014 and 2013 the tax rate applied in calculation of the tax payables of the Group is 10%. For the calculation of the deferred tax assets and liabilities as at June 30, 2014, March 31, 2014 and December 31, 2013 a tax rate of 10% has been used.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that the accruals for tax payables are sufficient for all open tax periods for a number of factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Group to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
3.10. Revenue and expenses recognition
3.10.1. Revenue from sales of goods, services and other income
Revenue is recognised when significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
Revenue is recognised at the fair value of the consideration received or receivable net of any granted discounts and including the gross economic benefits received by or due to the Group. The amounts gathered on behalf of third parties such as sales taxes (value added tax) are excluded from revenue. Revenue generated from sale of fuel is reported at its gross amount with the excise due, which is considered an integral part of the price of the goods.
When the result of a transaction for services rendering can be estimated reliably, revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period. When the outcome of a transaction cannot be reliably estimated, the revenue is recognised to the extent that the expenses recognised are recoverable.
3.10.1. Revenue from sales of goods, services and other income (continued)
Rental income from investment property is recognised as revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from other property is recognised as other income.
Gain (loss) from the sale of property, plant and equipment, and intangible assets and materials are presented as other income (expenses).
When economic benefits are expected to arise in several financial periods and their relation to revenue can only be generally or indirectly estimated, expenses are recognised in profit or loss based on procedures for systematic and rational distribution.
In exchange of assets, revenue (expense) is reported as a result of the exchange transaction to the amount of the difference between the fair value of the received asset and the carrying amount of the exchanged asset.
3.10.2. Finance income and finance costs
Finance income comprises interest income, gain on transactions with own bonds, foreign exchange rate gains and other finance income. Finance costs comprise interest expenses, foreign exchange rate losses, bank fees, commissions and other financial expenses.
Borrowing costs, which may be directly attributable to the acquisition, construction or production of a qualifying asset prior to its being ready for its intended use or sale, and necessarily takes extended period of time, are capitalized in part of the cost of the asset. All other finance income and costs are recognized in profit or loss for all instruments, measured at amortized cost using the effective interest rate method.
Income for equity interests is recognised when the Group is entitled to receive the income.
Gains and losses from exchange rate differences are reported on a net basis.
3.11. Leases
3.11.1. Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. At inception or upon reassessment of an arrangement that contains a lease, the Group separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group's incremental borrowing rate.
3.11.2. Leased assets
Assets held by the Group under leases which transfer to the Group substantially all of the risks and rewards of ownership are classified as finance leases. On initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Assets held under other leases are classified as operating leases and are not recognised in the Group's consolidated statement of financial position.
3.11.3. Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
3.11.4. Operating lease
Costs incurred for assets leased under operating lease contracts are recognized in profit or loss on a straight-line basis for the term of the contract. Lease incentives received is recognised as a reduction of the lease expenses on a straight-line basis for the term of the lease contract.
Revenue realized from assets under operating lease contracts is recognized in profit or loss on a straight-line basis for the term of the contract. Initial costs, directly related to the conclusion of the lease agreement, are capitalized in the cost of the asset and are recognized as expenses on a straight-line basis for the term of the lease contract.
3.11.5. Leaseback agreements
A leaseback transaction is related to the sale of an asset and the hiring back of the same asset. The accounting treatment of leaseback depends on the type of the respective lease contract and the nature of the transaction.
If the leaseback is a finance lease, the transaction is a means of granting financing to the lessee by the lessor, where the asset serves as collateral. If, according to the provisions of the finance lease contract, there are no changes in the rights of use of the asset by the seller/lessee before and after the transaction, then the transaction is not within the scope of IAS 17 Leases and is, in fact, financing. In this case, the proceeds received from the transaction are presented as loans and borrowings liabilities in the statement of financial position, while the direct costs incurred by the lessee during the transaction are deferred for the period of the lease contract.
3.12. Segments reporting
The information about operating segments in these consolidated financial statements is presented in accordance with the operating reports submitted to Group's Management. Based on these reports decisions are taken in respect of the resources to be allocated to the segment and the results of its activity are evaluated.
4. Determination of fair values
A number of the Group's accounting policies and disclosures require the measurement of fair value, for both financial and non-financial assets and liabilities.
The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values and reports directly to the Management.
4. Determination of fair values (continued)
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services is used to measure fair values, then the valuation team assesses the evidence obtained from third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.
Significant unobservable inputs and valuation adjustments are reviewed regularly. If third party information, such as broker quotes or pricing services is used to measure fair values, then the valuation team assesses the evidence obtained from third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.
Significant valuation issues are reported to the Management of the Group.
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different level in a fair value hierarchy based on the inputs in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in note 15 - Investment property;
5. Segments reporting
The Group has identified the following operating segments, based on the reports presented to the Group's Management, which are used in the process of strategic decision making:
Wholesale of fuels - wholesale of petroleum products in Bulgaria through own storage facilities of the Group; fuel bunkering abroad;
Retail of fuels - retail of petroleum and other products through a network of own petrol stations; servicing of petrol stations and their belonging commercial and service facilities;
Other activities - transportation of fuel with own and hired vehicles; revenue from rent and other activities.
5. Segments reporting (continued)
The segment information, presented to the Group's Management for the periods ended as of June 30, 2014 and 2013 is as follows:
June 30, 2014
Wholesale of fuels
Retail of fuels
All other segments
Total for the Group
BGN'000
BGN'000
BGN'000
BGN'000
Total segment revenue
390,412
266,812
6,072
663,296
Intra-group revenue
175,621
12,481
3,741
191,843
Revenue from external customers
214,791
254,331
2,331
471,453
Adjusted EBITDA
(8,863)
10,223
1,064
2,424
Depreciation/amortization
1,494
3,947
453
5,894
June 30, 2013
Wholesale of fuels
Retail of fuels
All other segments
Total for the Group
BGN'000
BGN'000
BGN'000
BGN'000
Total segment revenue
573,572
282,035
4,338
859,945
Intra-group revenue
242,047
13,218
2,862
258,127
Revenue from external customers
331,525
268,817
1,476
601,818
Adjusted EBITDA
(5,406)
6,975
1,272
2,841
Depreciation/amortization
1,287
4,499
471
6,257
Impairment loss
(137)
-
-
(137)
The policies for recognition of revenue from intra-group sales and sales to external clients for the purposes of the reporting by segments do not differ from these applied by the Group for revenue recognition in the consolidated statement of profit and loss and other comprehensive income.
The Management of the Group evaluates the results of the performance of the segments on the basis of the adjusted EBITDA. In the calculation of the adjusted EBITDA the effect of the impairment of assets is not taken into account. The reconciliation of the adjusted EBITDA and the profit (loss) before tax is presented in the table below:
June30, 2014 BGN'000
June30, 2013 BGN'000
Adjusted EBITDA - reporting segments
1,360
1,569
Adjusted EBITDA - all other segments
1,064
1,272
Depreciation/amortization
(5,894)
(6,257)
Impairment loss
-
137
Finance costs, net
(19,101)
(19,965)
Loss before tax
(22,571)
(23,244)
The revenue from sales to external customers in segment Wholesale of fuels for the second quarter of 2014 includes sales to the largest customer of the segment at the amount of BGN 67,812 thousand.
6. Revenue from sales
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Sale of goods
465,773
596,333
243,291
315,465
Sale of services
4,868
4,488
2,586
2,079
470,641
600,821
245,877
317,544
7. Other income
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Surplus of assets
292
519
33
109
Insurance claims
51
81
28
49
Gain from sales of property, plant and equipment, incl.
46
50
11
35
Income from sales
81
127
32
89
Carrying amount
(35)
(77)
(21)
(54)
Income from penalties
40
39
24
Gain from liquidation of property, plant and equipment and materials, incl.
-
106
-
-
Income from liquidation
-
781
-
-
Carrying amount
-
(675)
-
-
Other
383
202
193
86
812
997
265
303
8. Materials and consumables
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Fuels and lubricants
1,605
1,665
757
858
Electricity and heating
1,290
1,569
524
613
Spare parts
315
338
176
178
Office consumables
276
290
132
152
Working clothes
129
53
13
27
Water supply
65
49
34
26
Advertising materials
19
147
11
94
Other
199
130
102
50
3,898
4,241
1,749
1,998
9. Hired services
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Commissions
2,856
2,303
1,632
1,353
Rents
1,240
1,166
614
573
Maintenance and repairs
890
803
467
381
Insurances
662
668
274
321
Transportation
626
795
318
487
Consulting and training
521
445
352
282
Cash collection
423
434
215
221
Communications
409
409
232
233
Software licenses
394
240
192
108
Advertising costs
324
196
258
100
State and municipal fees
277
560
126
236
Security
146
196
99
78
Holding fee
-
1,052
-
525
Other
370
233
241
116
9,138
9,500
5,020
5,014
10. Personnel expenses
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Wages and salaries
16,251
11,308
9,481
5,881
Social security contributions and benefits
2,841
2,791
1,373
1,611
19,092
14,099
10,854
7,492
11. Other expenses
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Local taxes, taxes on expenses and other taxes
889
843
656
662
Penalties and indemnities
810
112
790
61
Scrap, shortages and derecognized assets
743
1,401
468
686
Entertainment expenses and sponsorship
227
290
69
218
Business trips
166
172
92
88
Loss from liquidation of property, plant and equipment and materials, incl.
47
-
46
24
Income from liquidation
-
-
-
(513)
Carrying amount
47
-
46
537
Impairment of assets
-
(137)
-
(137)
Other
59
58
37
40
2,941
2,739
2,158
1,642
12. Finance income and costs
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Finance income
Interest income, including:
2,569
4,451
1,346
2,292
Interest income on loans granted
2,327
4,171
1216
2,127
Interest income on trade receivables
231
279
127
164
Other interest income
11
1
3
1
Gain on transactions with own bonds
-
-
-
-
Foreign exchange gain, net
-
-
-
8,655
Other finance income
-
5
-
1
2,569
4,456
1,346
10,948
Finance costs
Interest expenses, including:
(16,706)
(18,849)
(8,635)
(9,734)
Interest expenses on debenture loans
(1,576)
(1,729)
(791)
(853)
Interest expenses on bank loans
(8,891)
(9,693)
(4,920)
(5,078)
Interest expenses on finance lease
(18)
(29)
(8)
(14)
Interest expense on leasebacks
(1,090)
(1,129)
(561)
(562)
Interest expenses on trade loans
(4,466)
(3,517)
(2,175)
(2,324)
Interest expenses to the state budget
(62)
(19)
(1)
(1)
Interest expenses on trade payables
(603)
(2,733)
(179)
(902)
Foreign exchange rate loss, net
(3,709)
(4,451)
(3,397)
-
Bank fees, commissions and other financial expenses
(1,255)
(1,121)
(608)
(567)
(21,670)
(24,421)
(12,640)
(10,301)
Finance income (costs), net
(19,101)
(19,965)
(11,294)
647
13. Taxation
13.1. Tax expenses
Tax expense recognised in profit or loss includes the amount of current and deferred income tax expenses in accordance with IAS 12 Income taxes.
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Three months ended June 30, 2014 BGN'000
Three months ended June 30, 2013 BGN'000
Current tax expense
465
615
122
312
Change in deferred tax, including:
(28)
(75)
(45)
(61)
Temporary differences recognized during the period
31
6
(5)
(20)
Temporary differences originated during the period
(59)
(81)
(40)
(41)
Total tax expense
437
540
77
251
13.2. Effective tax rate
The reconciliation between the accounting profit (loss) and tax expense, as well as calculation of the effective tax rate as of June 30, 2014 and 2013 is presented in the table below:
Six months ended June 30, 2014 BGN'000
Six months ended June 30, 2013 BGN'000
Loss before tax
(22,571)
(23,244)
Applicable tax rate
10%
10%
Tax benefit at the applicable tax rate
(2,257)
(2,324)
Tax effect of permanent differences
46
(772)
Tax effect of recognised in the current period tax asset unrecognised in prior periods
3
2,803
Tax effect of unrecognised tax asset in the current period, arisen in the current period
2,614
(8)
Tax effect from consolidation adjustments
31
841
Tax expense
437
540
Effective tax rate
-
-
The respective tax periods of the Group may be subject to inspection by the tax authorities until the expiration of 5 years from the end of the year in which a declaration was submitted, or should have been submitted. Consequently additional taxes or penalties may be imposed in accordance with the interpretation of the tax legislation. The Group's management is not aware of any circumstances which may give rise to a contingent additional liability in this respect.
13.3. Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities were recognized in respect of the following positions:
Asset (liability) as at January 1, 2013
Recognised in profit and loss
Asset (liability) as at June 30, 2013
Recognised in profit and loss
Asset (liability) as at December 31, 2013
Recognised in profit and loss
Asset (liability) as at June 30, 2014
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000.
Property, plant and equipment
(2,371)
63
(2,308)
13
(2,295)
29
(2,266)
Impairment of assets
1,779
(18)
1,761
(246)
1,515
(6)
1,509
Tax loss carry-forwards
26
13
39
21
60
(31)
29
Subsequent measurement of assets
-
-
-
12
12
(12)
-
Provisions for unused paid leave and other provisions
185
20
205
(28)
177
55
232
Excess of interest payments in accordance with CITA
6
4
10
(5)
5
(1)
4
Other temporary differences, including unpaid benefits to individuals
720
(7)
713
11
724
(6)
718
345
75
420
(222)
198
28
226
14. Property, plant, equipment and intangible assets
Land BGN'000
Buildings BGN'000
Plant and equip-ment BGN'000
Vehicles BGN'000
Other assets BGN'000
Assets under construc-tion BGN'000
Intan-gible assets BGN'000
Total BGN'000
Cost
Balance at January 1, 2013
43,110
57,392
161,068
15,288
15,953
1,499
5,261
299,571
Additions
211
10
1,258
15
1,381
1,161
10
4,046
Transfers
300
-
1,224
-
2
(1,746)
220
-
Disposals
(230)
(55)
(1,004)
(28)
(407)
(13)
(33)
(1,770)
Balance at June 30, 2013
43,391
57,347
162,546
15,275
16,929
901
5,458
301,847
Additions
52
79
737
797
335
2,793
26
4,819
Transfers
3,429
8,845
1,095
-
191
(755)
-
12,805
Disposals
(3)
(91)
(4,609)
(150)
(356)
(213)
(1)
(5,423)
Balance at December 31, 2013
46,869
66,180
159,769
15,922
17,099
2,726
5,483
314,048
Additions
68
55
854
109
196
5,991
55
7,328
Transfers
-
688
3,033
257
(3,978)
-
Disposals
-
(27)
(761)
(212)
(527)
(5)
(77)
(1,609)
Balance at June 30, 2014
46,937
66,896
162,895
15,819
17,025
4,734
5,461
319,767
Accumulated depreciation
Balance at January 1, 2013
-
24,934
88,763
13,530
11,434
-
3,557
142,218
Accumulated
-
918
3,440
408
601
-
603
5,970
Disposals
-
(20)
(587)
(28)
(388)
-
(32)
(1,055)
Balance at June 30, 2013
-
25,832
91,616
13,910
11,647
-
4,128
147,133
Accumulated
-
917
3,459
413
626
-
553
5,968
Transfers
-
1,326
8
-
128
-
-
1,462
Disposals
-
(47)
(4,057)
(121)
(336)
-
(1)
(4,562)
Balance at December 31, 2013
-
28,028
91,026
14,202
12,065
-
4,680
150,001
Accumulated
-
1,097
3,497
478
601
-
163
5,836
Disposals
-
(4)
(751)
(206)
(500)
-
(77)
(1,538)
Balance at June 30, 2014
-
29,121
93,772
14,474
12,166
-
4,766
154,299
Carrying amount at January 1, 2013
43,110
32,458
72,305
1,758
4,519
1,499
1,704
157,353
Carrying amount at June 30, 2013
43,391
31,515
70,930
1,365
5,282
901
1,330
154,714
Carrying amount at December 31, 2013
46,869
38,152
68,743
1,720
5,034
2,726
803
164,047
Carrying amount at June 30, 2014
46,937
37,775
69,123
1,345
4,859
4,734
695
165,468
Vehicles with carrying amount of BGN 372 thousand (2013: BGN 773 thousand) were acquired under finance lease contracts.
14. Property, plant, equipment and intangible assets (continued)
As at June 30, 2014 property, plant and equipment with carrying amount of BGN 60,144 thousand are pledged as collateral under bank and trade loans granted to the Group and non-related parties and also to secure trade payables to non-related parties (see also note 24).
As at June 30, 2014 in order to secure a claim against a Company from the Group, a collateral deed has been imposed on tangible assets owned by the Group with total carrying amount BGN 1,866 thousand.
15. Investment property
June 30, 2014 BGN '000
March 31, 2014 BGN '000
December31, 2013 BGN '000
Cost
Balance at the beginning of the period
23,227
23,227
36,042
Additions
19
18
38
Transfers
-
-
(12,805)
Disposals
(42)
(42)
(48)
Balance at the end of the period
23,204
23,203
23,227
Accumulated depreciation
Balance at the beginning of the period
2,609
2,609
3,538
Charged for the period
58
30
577
Transfers
(41)
(41)
(1,462)
Disposals
-
-
(44)
Balance at the end of the period
2,626
2,598
2,609
Carrying amount at the beginning of the period
20,618
20,618
32,504
Carrying amount at the end of the period
20,578
20,605
20,618
The fair value of the investment properties is determined by using the services of a licensed expert valuer with required professional qualification and experience in the location and category of the property to be valued. The fair value is based on a market price, which is the estimated price at which a property could be exchanged on the date of the valuation between knowledgeable, willing parties in normal market conditions after the appropriate marketing, in which the counterparties have acted consciously.
15. Investment property (continued)
The fair value of land is determined based on the comparative method and real estate agencies database. Buildings are valued at more than one method as the market value is defined as the weighted value of the results obtained by different methods and expert weights according to the reliability of the information used and the valuation experience. The valuation of other assets - machines, equipment, fixtures and other, comes from the information available and its reliability and faithfulness. The new recoverable amount is taken from manufacturers or brokers, exchanges, and foreign trade organizations, adjusted by coefficients reflecting the condition of valued assets. For assets with developed secondary market, the method of market analogues is used.
As at June 30, 2014 the fair value of investment property amounting to BGN 31,440 thousand has been categorised as a Level 3 fair value based on the inputs to the valuation technique used.
As of June 30, 2014, investment properties with carrying amount of BGN 12,229 thousand serve as collaterals under interest-bearing loans received by the Group and non-related parties (see also note 24).
16. Investments in other companies
As of June 30, 2014, March 2014 and December 31, 2013 the Group owns 6.92% of the equity of Capital 3000 AD. The investment in Capital 3000 AD has been fully impaired in prior reporting periods.
17. Goodwill
June 30, 2014 BGN '000
March 31, 2014 BGN '000
December 31, 2013 BGN '000
Cost
19,575
19,575
19,575
Impairment loss
(1,243)
(1,243)
(1,243)
18,332
18,332
18,332
As at June 30, 2014 the goodwill with carrying amount of BGN 18,332 thousand is attributable to the acquisition of the subsidiaries Naftex Petrol EOOD and BPI EAD.
The goodwill attributable to the acquisition of Naftex Security EAD at the amount of BGN 1,243 thousand was completely impaired as at the date of the acquisition.
18. Loans granted
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Long-term loans
Loans granted to non-related parties, including
21,709
21,509
21,034
Initial value
22,534
22,334
21,859
Allowance for impairment
(825)
(825)
(825)
21,709
21,509
21,034
Short-term loans
Loans granted to non-related parties, including
52,580
51,261
58,475
Initial value
56,551
55,232
62,446
Allowance for impairment
(3,971)
(3,971)
(3,971)
52,580
51,261
58,475
74,289
72,770
79,509
In January 2014 a company from the Group granted a loan to a non-related party amounting to EUR 15,553 thousand with maturity in 2015 and interest rate 9%.
In January 2014, under art. 311, par.1 of Commercial Act and a Real Pledge Contract with the Controlling Company till November 2013, the interests in three of its subsidiaries were sold due to expired notary invitation. The shares were sold to a licensed investment intermediary for a total amount of BGN 29,850 thousand.
Subsequently the shares were resold by the licensed investment intermediary to a non-related party which acquired the investments through a bank loan which was secured by the Group by a first pledge of cash at bank account amounting to BGN 30,520 thousand. In May 2014 the bank loan agreement expired and the bank collected the pledged outstanding principal as well as due interest at the amount of BGN 30,511 thousand. As a result the Group recognised a regression claim in compliance with the Real Pledge Contract between the second buyer and the Group.
On February 17, 2014 The Group signed a loan agreement with the second buyer. The loan amount is BGN 200 thousand and it relates to paid outstanding interest (see above). The loan maturity is February 5, 2015 and the interest rate is 9%. The loan is secured by a pledge of shares of borrower subsidiaries.
During the reporting period loans granted to non-related parties amounting to BGN 2,706 thousand were settled. At the reporting date the outstanding balance on these loans is BGN 35 thousand.
The Management has performed an analysis of loans granted in order to determine their fair values and their respective level in the fair value hierarchy. The Management of the Group considers that the carrying amounts of the granted loans in the consolidated statement of financial position are reasonable approximations of their fair value as at June 30, 2014, March 31, 2014 and December 31, 2013 within Level 3 category.
19. Inventory
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Non-current assets
Compulsory stock of fuels
70,915
71,865
73,493
70,915
71,865
73,493
Current assets
Goods, including:
42,640
34,057
75,466
Fuels
36,332
27,643
68,781
Lubricants and other goods
6,308
6,414
6,685
Materials
2,574
2,720
2,633
45,214
36,777
78,099
116,129
108,642
151,592
The Group stores compulsory stock of fuels in compliance with the Stocks of Crude Oil and Petroleum Products Act.As of June 30, 2014, March 31, 2014 and December 31, 2013 such inventory is presented as non-current assets with a total amount of BGN 70,915 thousand, BGN 71,865 thousand and BGN 73,493 thousand, respectively.
As at June 30, 2014 fuels at the amount of BGN 93,778 thousand are pledged as collateral under trade liabilities and bank loans received by the Group (see also note 24).
20. Trade and other receivables
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Receivables from clients, including
77,791
66,213
65,541
Initial value
88,060
76,519
76,001
Allowance for impairment
(10,269)
(10,306)
(10,460)
Regression claim
30,279
-
-
Receivables under cession contracts
23,900
23,900
17,698
Advances granted, including
1,000
1,716
723
Initial value
2,049
2,765
1,772
Allowance for impairment
(1,049)
(1,049)
(1,049)
Receivables from related parties, including
-
1,153
1,153
Guarantees for participation in tender procedures
788
677
883
Deferred expenses
537
442
617
Litigations and writs, including
387
381
378
Initial value
755
749
746
Allowance for impairment
(368)
(368)
(368)
Tax receivables, including
65
21
51
VAT
58
13
43
Other taxes
7
8
8
Other
3,111
831
456
Initial value
3,423
1,143
768
Allowance for impairment
(312)
(312)
(312)
137,858
95,334
87,500
20. Trade and other receivables (continued)
The receivables from related parties are disclosed in note 30.
In May 2014 bank loan granted to a non-related party and guaranteed by the Group expired and the outstanding principal and due interest at the amount of BGN 30,511 thousand were collected by the bank. Consequently the Group recognised a regression claim in compliance with the Real Pledge Contract between the non-related party and the Group (see also note 18).
The Management performed an analysis of the trade receivables in order to determine their fair values and their level in the fair value hierarchy. The Management considers that the carrying values of the trade and other receivables in the consolidated statement of financial position are reasonable approximations of their fair value as at June 30, 2014, March 31, 2014 and December 31, 2013 within Level 3 category.
The Group considers that unimpaired overdue receivables are collectible based on historical information about payments, guarantees received and a detailed analysis of the credit risk and collaterals of its customers.
As at June 30, 2014 trade receivables from clients amounting to BGN 35,759 thousand are pledged as collateral under bank loans received by the Group (see also note 24).
21. Current income tax
The excess of corporate taxes paid during the current and prior periods above tax payables as at June 30, 2014, March 31, 2014 and December 31, 2013 at the amount of BGN 546 thousand, BGN 188 thousand and BGN 353 thousand respectively, is presented in the consolidated statement of financial position as refundable income tax.
The refundable, respectively due income taxes, are formed as follows:
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Income tax receivable at the beginning of the period
353
353
455
Corporate income tax accrued
(465)
(343)
(1,152)
Corporate income tax paid
658
178
1,131
Corporate income tax offset
-
-
(81)
Refundable corporate income tax at the end of the period
546
188
353
22. Cash and cash equivalents
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Cash at financial institution under surveillance
7,443
-
-
Cash at banks
6,105
5,332
7,919
Cash in transit
3,241
2,112
3,453
Cash on hand
79
71
135
Cash as per cash flow statement
16,868
7,515
11,507
Restricted cash
-
30,392
-
Cash as per statement of financial position
16,868
37,907
11,507
Cash in transit comprises cash collected from fuel stations as at the end of the reporting period, but actually received in the bank accounts of the Group in the beginning of the next reporting period.
Restricted cash comprises cash, which the Group temporary has no right to use and which is pledged as collateral under bank loan granted to non-related party (see also note 18).
In June 2014Corporate Commercial Bank AD was placed under special surveillance by the Bulgarian National Bank. All transactions were limited to intra-bank payments and repayment of loans granted by the CCB.
As at June 30, 2014 cash amounting to BGN 13,027 thousand serve as collateral under bank loans granted to the Group (see also note 24).
23. Registered capital
The Group's registered capital is presented at its nominal value. The registered capital of the Group represents the registered capital of the Parent company Petrol AD, reduced by redeemed own shares as at June 30, 2014, March 31, 2014 and December 31, 2013.
As at June 30, 2014, March 31, 2014 and December 31, 2013 the shareholders in the Parent company are as follows:
Shareholder
June 30, 2014
March 31, 2014
December 31, 2013
Alfa Capital AD
28.85%
28.85%
28.85%
Julinor EOOD
23.11%
23.11%
-
Correct Pharm EOOD
18.31%
18.31%
18.31%
VIP Properties EOOD
18.31%
18.31%
-
Corporate Commercial Bank AD
5,51%
7.96%
7.96%
Ministry of Economics
0.65%
0.65%
0.65%
Naftex Petrol EOOD
0.34%
0.34%
41.85%
Varna Storage EOOD
0.04%
0.04%
0.04%
Other minority shareholders
10.39%
2.43%
2.34%
100.00%
100.00%
100.00%
In January 2014, Naftex Petrol EOOD sold 45,349,000 of Petrol AD's shares on the regulated stock exchange market, representing 41.51% of the share capital. The main buyers are Julinor EOOD (25,244,585 shares) and VIP Properties EOOD (20,000,000 shares).
24. Loans and borrowings
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Non-current liabilities
Loans from financial institutions
60,023
65,905
65,844
Trade loans from non-related parties
71,072
70,402
70,428
Debenture loans
35,962
35,933
35,902
Liabilities under leaseback agreements
34,707
35,430
35,923
Finance lease
119
136
153
201,883
207,806
208,250
Current liabilities
Loans from financial institutions
156,959
131,918
101,514
Trade loans from non-related parties
38,015
36,971
77,841
Debenture loans
1,298
536
2,838
Liabilities under leaseback agreements
1,726
2,036
1,610
Finance lease
475
632
788
198,473
172,093
184,591
400,356
379,899
392,841
In 2013 a long-term trade loan was utilized amounting to USD 60,000 thousand, with maturity in November 2019 and contractual interest rate of 9%. The loan is secured by cash in bank accounts, mortgage and pledge on lands and buildings, machines and equipment and a guarantee in creditor's favour.
In 2013 a short-term trade loan from non-related party was utilized amounting to USD 16,200 thousand (BGN 32,197 thousand) with maturity in October 2014 and contracted interest rate of 8.5%. The loan is secured by a mortgage on lands and buildings, pledge on machines and equipment, trade receivables from non-related parties and cash in bank accounts, as well as a guarantee in creditor's favour.
As at June 30, 2014 the Group has an obligation under a trade loan amounting to BGN 1,959 thousand due to a non-related party, which was a Controlling company till November 2013 (2013: BGN 1,878 thousand). The agreed interest rate is 3m SOFIBOR plus margin.
In December 2012 the Group received a short tem loan at the amount of EUR 15,000 thousand (BGN 29,337 thousand) with maturity in 2014 and interest rate of 9%. In January 2014 the Group fully repaid the loan.
24.1. Debenture loans
In October, 2006 the Parent company issued 2,000 registered transferable bonds with fixed annual interest rate of 8.375% and issue value 99.507% of the face value, which is determined at EUR 50,000 per bond. The bond term is 5 years and the maturity date is in October 2011. The principal is due in one payment at the maturity date. At the general meetings of the bondholders conducted in October and December 2011, it was decided to extend the term of the issue until January 26, 2017.
The issue is secured by the Group's receivables on granted loans to the Controlling Company till November 2013 and to a subsidiary, as well as by corporate guarantee, issued by a subsidiary. Interest is paid once a year. The annual effective interest rate after the extension is 8.61%. The purpose of the issue is to provide working capital, financing in investment projects and restructuring of a previous debt of the Group.
In 2013 the Group repurchased bonds with face value EUR 2,555 thousand. As at the date of these consolidated financial statements the nominal value of debenture loans is EUR 18,659 thousand.
The debenture loans are presented in the consolidated statement of financial position at amortized cost.
As at June 30, 2014 the fair value of debenture loans is BGN 36,494 thousand (2013: BGN 36,494 thousand), estimated at interest rate 9.12% (2013: 9.12%).
24.2. Leaseback agreements
In prior reporting periods, the Group has signed several contracts for sale of property, where a commitment of the seller to repurchase the assets, under the condition of a finance lease, was agreed. That scheme, also known as leaseback, in fact represents attracting financing, secured with the asset. Proceeds from leaseback agreements are presented as liabilities under interest-bearing loans received (see also note 3.11.5.).
Nominal interest
Maturity
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31,, 2013 BGN'000
Hotel complex in Burgas
1m Euribor + 2.25% (min 0.25%)
07.2023
19,410
20,214
20,120
Administrative building in Varna
1m Euribor + 2.25% (min 5.25%)
04.2023
5,065
5,152
5,142
Administrative building in Sofia
1m Euribor + 2.25% (min 5.25%)
04.2023
8,412
8,452
8,524
Fuel storage depot in Svilengrad
BIR + 1.75%
12.2020
3,546
3,648
3,747
36,433
37,466
37,533
The effective interest rate on loans received under leaseback agreements is between 4.75% - 8.08%.
The obligations under leaseback agreements are avalled by the Controlling until November 2013 company.
24.3. Loans from financial institutions
Nominal interest
Maturity
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Investment loan
8.5%
11.2018
75,684
83,028
81,112
Investment loan
3m Euribor + 3.1% (min 7%)
02.2018
1,956
2,089
2,222
Working capital loan
9%
07.2014
54,416
49,648
37,468
Working capital loan
9%
07.2015
21,636
21,276
21,359
Working capital loan
3m Euribor + 7.6% (min 9%)
12.2014
13,305
13,545
15,162
Working capital loan
9%
02.2015
28,505
28,237
-
Working capital loan
9.1%
01.2014
-
-
10,035
Working capital loan
9%
06.2015
21,480
216,982
197,823
167,358
The average effective interest rate on bank loans received is between8% and 9.5% (2013: 8% - 10%).
In February 2014 a company from the Group entered into a bank credit line agreement amounting to USD 20,000 thousand. The credit line is secured by a pledge on cash in bank accounts, trade receivables and inventories.
In April 2014 a Group's subsidiary entered into a bank loan agreement amounting to USD 15,000 thousand. The loan is secured by a pledge on cash in bank accounts, trade receivables and inventories.
The liabilities on loans received from financial institutions are secured by property, plant and equipment, inventory, cash and receivables of the Group, as well as guarantees, promissory notes and pledge of a commercial enterprise.
24.4. Obligations under finance lease
June 30, 2014
March 31, 2014
December 31, 2013
Future minimum lease payments
Interest
Present value of minimum lease payments
Future minimum lease payments
Interest
Present value of minimum lease payments
Future minimum lease payments
Interest
Present value of minimum lease payments
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Within one year
492
(17)
475
652
(20)
632
816
(28)
788
Between one and five years
127
(8)
119
144
(8)
136
167
(14)
153
619
(25)
594
796
(28)
768
983
(42)
941
Assets acquired by the Group under finance lease agreements comprise of vehicles. The lease term of the contracts varies between 3 and 6 years. As at June 30, 2014 the average effective interest rate under finance lease agreements is 4.31%.
The Management of the Group believes that the fair value of the obligations under finance leases does not differ significantly from their carrying amount.
The liabilities under finance lease agreements are secured by promissory notes issued by the Group in favour of the lessors, which expire at the termination date of the respective agreements. The promissory notes issued by the Group are avalled by the Controlling until November 2013 company.
25. Obligation for defined benefit retirement compensations
In the current period the Group accrued obligation for defined benefit retirement compensations amounting to BGN 849 thousand. The amount of the liability is determined on the basis of an actuarial valuation, based on assumptions for mortality, disability, employment turnover, salary increases, etc.
The present value of the liability is calculated using a discount factor of 3-4% and expected salary increases between 3% and 4%.
26. Trade and other payables
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Payables to suppliers
91,403
65,686
153,176
Tax payables, including
22,548
25,321
44,489
VAT
7,079
7,407
21,544
Excise duty and other taxes
15,469
17,914
22,945
Payables to personnel and social security funds
3,779
3,803
3,538
Deferred income
175
142
308
Advances received
170
211
189
Other
7,732
7,820
23,759
125,807
102,983
225,459
Other payables include obligations to acquire receivables under cessions agreements amounting to BGN 1,745 thousand (2013: BGN 17,529 thousand) and a liability to a counterparty, who repaid the Group's payables at the amount of BGN 4,587 thousand (2013: BGN 4,587 thousand).
The Group accrues unused paid leave provision of employees in compliance with IAS 19 Employee Benefits. The movement of these provisions for the period is as follows:
June 30, 2014 BGN'000
March 31, 2014 BGN'000
December 31, 2013 BGN'000
Balance at the beginning of the period
688
688
803
Accrued during the period
665
241
363
Utilised during the period
(127)
(97)
(460)
Written off due to expired term
-
-
(18)
Balance at the end of the period, including:
1,226
832
688
Paid leaves
1,037
705
584
Social security on paid leaves
189
127
104
The balance at the end of the period is presented in the consolidated statement of financial position together with current payable to personnel.
The Management performed an analysis of trade payables in order to determine their fair values and their level in the fair value hierarchy. The Management of the Group considers that the carrying amounts of the current payables in the consolidated statement of financial position are reasonable approximations of their fair value as at June 30, 2014, March 31, 2014 and December 31, 2013 within Level 3 category.
Non-current assets with carrying amount of BGN 1,558 thousand serve as collateral under trade payables.
27. Subsidiaries
The subsidiaries, included in the consolidation, over which the Group has control as of
June 30, 2014, March 31, 2014 and December 31, 2013 are as follows:
Subsidiary
Main activity
Investment as o June 30, 2014
Investment as of March 31, 2014
Investment as of December31, 2013
Naftex Petrol EOOD
Wholesale with fuels
100%
100%
100%
Petrol Trans Express EOOD
Transport services
100%
100%
100%
Petrol Technika EOOD
Service and maintenance of fuel stations
100%
100%
100%
Petrol Gas EOOD
Wholesale with fuels
100%
100%
100%
Petrol Properties EOOD
Real estate and moveable property trade
100%
100%
100%
Elite Petrol AD
Management, rent and sale of properties
99.99%
99.99%
99.99%
Eurocapital-Bulgaria EAD
Management, rent and sale of properties and construction works through sub-contractors
100%
100%
100%
BPI EAD
Rent of property
100%
100%
100%
Naftex Security EAD
Security services - individuals and property
100%
100%
100%
Jurex Consult AD
Legal advises, management and consulting services
79.95%
79.95%
79.95%
Varna Storage EOOD
Trade with oil and oil products
100%
100%
100%
Naftex Petrol Trade EOOD
Processing and trade with oil and oil products
100%
100%
100%
Petrol Eco Tour Invest EOOD
Consulting and engineering
100%
100%
100%
Blitz Aviation AD
Aeronautics
99%
99%
99%
In December 2013 a company from the Group became a co-founder of a new subsidiary Blitz Aviation ADrecording ownership of 99% of registered capital, and 25% of registered capital were paid-in. In January 2014 the newly established company was registered in the Trade Register.
28. Special purpose entities
In compliance with SIC 12 Consolidation - Special Purpose Entities (SPE) and the approved accounting policy of the Group, the Group of Petrol AD consolidates such entities because the essence of the relationship between the Group and the SPEs indicates that they are controlled by the Group, as follows:
The activities of the SPEs are being conducted on behalf of Naftex Petrol EOOD according to its specific business needs so that Naftex Petrol EOOD obtains benefits from the operations of the SPEs,
Naftex Petrol EOOD has the right to make decisions, which entail obtaining the majority of the benefits from the activities of the SPEs,
Naftex Petrol has the rights to obtain the majority of the benefits from the activities of the SPEs and is therefore exposed to risks incident to their activities.
The consolidated SPEs controlled by the Group till the end of November 2013 were as follows:
28. Special purpose entities (continued)
Name of SPE
Main activity
Petrol Trade EOOD
Domestic and foreign trade with petroleum products
Naftex Trade EOOD
Domestic and foreign trade with petroleum products
In December 2013 under art.516, par.7 of Civil Procedure Code, all shares of Petrol AD owned by Petrol Holding AD were sold and the sale was carried out by a private enforcement agentin connection with enforcement proceedings against Petrol Holding AD. Thus, the Group loses control over SPEs. Since December 4, 2013, as a result of the lost control over the SPEs, its assets and liabilities were derecognised from the consolidated statement of financial position.
29. Acquisition of non-controlling interest
In December 2013 a company from the Group became a co-founder of a new subsidiary Blitz Aviation ADrecording ownership of 99% of registered capital. 1% of registered capital is owned by the non-controlling interest. 25% of registered capital were paid-in. In January 2014 the newly established company was registered in the Trade Register (see also note 27). As a result, the Group recognised non-controlling interest as follows:
Fair value of net assets
Non-controlling interest
Non-controlling interest
BGN'000
%
BGN'000
Blitz Aviation AD
250
1%
3
3
The following table summarizes changes in the non-controlling interest in 2014 and 2013:
Financial result for the period
Non-controlling interest
Non-controlling interest
BGN'000
%
BGN'000
Non-controlling interest as of January 1, 2013
54
Share of Non-controlling interest in Total comprehensive income
Jurex Consult AD
15
20.05%
3
Non-controlling interest as of December 31, 2013
57
Effect of acquisition of non-controlling interest
Blitz Aviation AD
2
Share of Non-controlling interest in Total comprehensive income
Jurex Consult AD
65
20.05%
13
Blitz Aviation AD
(82)
1%
(1)
Non-controlling interest as of June 30, 2014
71
30. Disclosure of related parties and related parties transactions
The related parties, which the Parent company controls and over which it exercises significant influence are disclosed in notes 16, 27 and 30.
The parent company (Controlling company) is Petrol AD.
During the reporting period transactions with the following related parties have been performed:
Related party
Petrol AD
Company under common control until November 2013 and Controlling company since December 2013
Naftex Petrol EOOD
Company under common control
Petrol rans Express EOOD
Company under common control
Petrol Technika EOOD
Company under common control
Naftex Security EAD
Company under common control
Jurex Consult AD
Company under common control
BPI EAD
Company under common control
Eurocapital Bulgaria EAD
Company under common control
Petrol Gas EOOD
Company under common control
Petrol Properties EOOD
Company under common control
Elit Petrol AD
Company under common control
Petrol Ecoour Invest EOOD
Company under common control
Varna Storage EOOD
Company under common control
Naftex Petrol Trade EOOD
Company under common control
Blitz Aviation AD
Company under common control
Petrol Holding AD
Controlling company until November 2013
Petrol Trade EOOD
Company under common control until November 2013
Naftex Trade EOOD
Company under common control until November 2013
Naftex Storage EOOD
Company under common control until November 2013
New Co Zagora EOOD
Company under common control until November 2013
Intehotel Bulgaria Burgas EOOD
Company under common control until November 2013
Air Lazur - General Aviation EOOD
Company under common control until November 2013
Transat AD
Company under common control until November 2013
Vratzata EOOD
Company under common control until November 2013
Varna Business Services EOOD
Company under common control until November 2013
rans Operator D
Company under common control until November 2013
Transcard Financial Services EAD
Company under common control until November 2013
ma Sport ED
Company under common control until November 2013
Balneohotel Pomorie AD
Company under common control until November 2013
PSFC Chernomoretz D
Company under common control until November 2013
Transcard Payment Services EAD
Company under common control until November 2013
The performedtransactions mainly relate to:
* purchase and sale of fuels;
* loans granted and received;
* purchase and sale of property, plant and equipment;
* services.
30. Disclosure of related parties and related parties transactions (continued)
Inthe first six monthsof 2014transactions with related parties were not performed.
The volume of transactions with related parties for the first six months of 2013 is as follows:
Related party
Six months ended June 30, 2013
Threemonths ended June 30, 2013
Six months ended June 30, 2013
Three months ended June 30, 2013
BGN'000
BGN'000
BGN'000
BGN'000
Sales
Sales
Purchase
Purchase
Controlling company till November 2013
159
80
1,172
594
Companies under common control till November 2013
925
460
1,008
573
1,084
540
2,180
1,167
Related party
Six months ended June 30, 2013
Three months ended June 30, 2013
Six months ended June 30, 2013
Three months ended June 30, 2013
BGN'000
BGN'000
BGN'000
BGN'000
Finance income
Finance income
Finance costs
Finance costs
Controlling company till November 2013
4,184
2,140
187
86
Companies under common control till November 2013
9
6
-
-
Key management
-
-
38
-
4,193
2,146
225
86
As at March 31, 2014 the outstanding balances with related parties include receivables from the key management personnel amounting to BGN 1,153 thousand (2013: BGN 1,153 thousand).
The remuneration of the members of Managing Board and Supervisory Board and Directors of the Parent company, included in the personnel expenses, is at the amount of BGN 487 thousand (June30, 2013: BGN 542 thousand).
31. Contingent assets and liabilities
31.1. Contingent assets
In 2006 the Group invoiced and recognized income from penalties at the amount of
BGN 8,196 thousand, which were accrued to counterparty, due to quantitative non-execution of a contract for fuel supply. As of December 31, 2006 the income was reversed, as the Management estimated that the criteria for income recognition in compliance with IAS 18 Revenue were not met. In this relation a contingent receivable, for which a legal dispute is in process, at the amount of BGN 8,196 thousand occurred for the Group.
31.2. Contingent liabilities
In compliance with the Stocks of Crude Oil and Petroleum Products Act, as a result of the import of fuels in 2013, the Group is obliged to accumulate and store fuel supply for a period of one year, starting from May 1, 2014 to April 30, 2015.
As at June 30, 2014 the Group's contingent liabilities include mortgages on land and buildings, and pledges on machines and equipment, cash in bank accounts and inventory serving as collateral under bank loans granted to non-related parties with total carrying amount of BGN 56,425 thousand. The Parent company has pledged its own trademarks as a guarantee under loans granted to third party.
In order to secure its liabilities under the Public Procurement Act, the Company has set up bank guarantees amounting to BGN 1,558 thousand as at the end of the reporting period.
As at June 30, 2014 a company from the Group has pledged as collateral on inventories under issued bank guarantee in favour of a supplier.
In February 2013, a contract for special pledge on vehicles was signed, which serve as a collateral for a bank loan granted to non-related party. As at the date of the pledge establishment, the vehicles were fully depreciated.
32. Subsequent events
In June 2014 the Controlling company received a Tax audit report issued by the National Revenue Agency, which assessed an additional tax liability for prior periods at the amount of BGN 2,033 thousand which is appealed. The Controlling company secured the imposed additional tax liability by pledge of property, plant and equipment and the enforcement was suspended.
In August 2014 according to decision taken by the Managing Board, a Group's subsidiary acquired 100% of the share capital of a new investment. The agreed consideration amounts to EUR 5,750 thousand which was secured by first pledge ofa commercial enterprise.
In August 2014 a Group's subsidiary acquired plot of land and a building amounting to BGN 5,000 thousand. Related liability was secured bysecond pledge ofa commercial enterprise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMGZRMLRGDZM
